AEF analysis: the Seventh Carbon Budget’s implications for aviation
14th March, 2025
All eyes were on the government’s independent climate change advisors, the Climate Change Committee, at the launch in late February of its advice on the 7th carbon budget running from 2038-2042. Nowhere are the decarbonisation stakes higher than in the aviation sector. AEF looks at what has been recommended.
While much of the media discussions around the 7th carbon budget focused on home heating and surface transport, another story was quietly brewing in the background. Aviation currently makes up 8% of the UK’s carbon emissions (up from 7% in the Committee’s 2020 advice on the Sixth Carbon Budget), making it the 6th most polluting industry. But the real story appears when you fast forward to 2038. The CCC estimates that while the low carbon transitions in other sectors will be well under way by then, two sectors will be lagging behind – aviation and agriculture. In less than 15 years from now, the CCC estimates that aviation will be the highest emitting sector, with the sector’s modest progress on decarbonisation significantly offset by its continued passenger and freight growth.
So what is going wrong with aviation? The CCC has always maintained that there are serious challenges in decarbonising aviation and recognises the technological challenges of switching to zero-emission aircraft any time soon. The aviation industry’s answer appears to be so-called Sustainable Aviation Fuel, and the UK government agrees (for now). In early 2025 the UK launched a SAF production mandate which is designed to guarantee a supply of SAF into the market. The problem is that SAF is significantly more expensive than kerosene, and there are currently limitations on the availability of feedstocks which offer the highest levels of emissions savings. The CCC’s view of the impact of these hurdles is not encouraging – while the government’s mandate aims to ensure that 22% of fuel on the market in 2040 is SAF, in the CCC’s Balanced Pathway that figure is only 17% (providing just 33% of required emissions savings).
The next big question mark is removals. If there is a challenge in scaling up SAF production at the speed required, scaling engineered removals is even more uncertain. Questions of which sectors are “permitted” by society to use up all the scarce removals resources aside, the CCC still expects that removals only begin to scale up from 2040 and will need to reach 22.7Mt by 2050 if the sector is to reach net zero. This raises significant questions about how mature Direct Air Capture (DAC) technologies will be – it currently costs around £500 a tonne of CO₂, and, as of early 2025, only around 1MT of capacity exists in the whole world.
Many climate campaigners were disappointed that the Climate Change Committee did not repeat its strong recommendation from CB6 in which it stated that there should be ‘no net expansion’ of UK airport capacity until the aviation sector was on track to decarbonise. This has all come with rather unfortunate timing, as just a few weeks before the CB7 advice was due to be published the UK Chancellor Rachel Reeves announced that the government was backing Heathrow expansion. Decisions are also expected on expansion plans at Luton and Gatwick airports, which together with an expanded Heathrow, would produce an extra 92Mt of emissions between the date of opening and 2050 – clearly threatening the Balanced Pathways trajectory.
Yet the failure to repeat the expansion red line doesn’t undermine the strength of the arguments in favour of constraining capacity. Let’s go back to the questions on cost. The CCC very clearly suggested that “demand management” ( a catch-all term meaning not allowing unfettered growth in flights) will be the main tool through which aviation’s rising emissions can be curtailed up to 2040 (making up 54% of emissions cuts). Although there was no policy prescription in terms of policy levers to achieve this outcome, the CCC report mentions “increased ticket prices” and the “aviation industry being responsible for the costs of decarbonisation” on several occasions. Deploying new technologies like SAF and removals at scale will likely lead to ticket prices increasing, in effect a form of carbon pricing. So while this approach may seem like a shift from the previous carbon budget and its focus on managing demand through restricting airport capacity, CB7’s focus on carbon pricing achieves much the same outcome. This could be more appealing to the current Government as increasing APD or introducing a frequent flyer levy (both referenced in CB7) can also generate much-needed public revenues.
Expanding Heathrow, Gatwick and Luton will provide significantly more airport capacity than needed to meet the Department for Transport’s and CCC’s passengers demand projections (AEF analysis)
In a demand-constrained world (the lever being price, not airport capacity), passenger numbers cannot grow by more than 2% by 2035, the CCC says. In fact, up to 2030, demand is actually projected to contract by 0.6%. Yet the plans to expand Gatwick airport alone would see a 6% increase in UK capacity within the next few years, which the airport will be keen to see filled with passengers. Allowing all the expansion plans for UK airports to go ahead would result in total capacity of around 506 mppa; the CCC believes that passenger numbers should be limited to 402m by 2050, all achievable within the capacity that already exists.
In today’s toxic culture war landscape, it appears that the CCC is wary of suggesting that people need to consider flying less for fear of an adverse Daily Telegraph headline. But there is evidence of public support for such measures: CCC’s Citizens Panel – which accompanied the research for CB7 – revealed that most participants accepted the idea of ticket price increasing, and supported the idea of frequent fliers paying more for their tickets.
The Government has until next year to respond to the CCC’s advice, but for now it’s focus will be on working out how to fit a square peg into a round hole with its decisions on expansion at Luton, Gatwick and Heathrow airports.